Pulses Set for Short Term Sail: Prices may rise 10%.

At the onset of the festive season in India, the prices of Pulses are set to sail as the demand for the Pulses is seen rising during the festive season in the country.

In India, demand for Pulses rise by around 10-20% during the major festivals like Diwali. But as the production this year is estimated to be higher, not much price pressure is expected in the long run. However, higher demand will drive up the prices but only for short term and that is because of festive season, but in long term prices can be expected to fall sharply on higher production.

India is poised to harvest record kharif pulses crop this year given the fact that as per latest estimates, acreage under pulses has expanded by a whopping 20 lakh hectares against last year.

Major kharif season pulses – arhar/tur (pigeon pea), urad (black matpe) and moong – have all been planted in larger acreages, with pigeon pea alone accounting for over half the additional acreage for pulses.

The statistics provided by the Ministry of Agriculture, total acreage for all pulses is seen at 110 lakh hectares this season, up by 20 lakh hectares from the last kharif's drought-hit 90 lakh hectares.

However, there have been several reports indicating damage to the crop in some regions due to extended rains, but the extent of loss is yet to be quantified; and there is broad consensus that such damage, if any, would be limited.

Even assuming an average yield of 500 kg a hectare, India may harvest an additional quantum of close to 10 lakh tonnes, a huge increase by any reckoning.

Importantly, soil moisture conditions are turning increasingly favorable for rabi season planting.

The rabi crop in India – planted in October/November and harvested in the following February/March – accounts for 60% of annual pulses production.

The domestic pulses market has already taken cognizance of the emerging situation and prices have corrected downward.

Despite large domestic output, Indian imports are likely to continue. As overall satisfactory agricultural outlook leads to higher rural incomes, there will also be rise in consumption demand as prices become more affordable and purchasing power rises.

According to the Agriculture Ministry’s, first advanced estimates for crop in 2010-11, Kharif Pulses production is estimated to at 6 million tonnes compared to 4.3 million tonnes in 2009-10.

Meanwhile the fourth advance estimates of production showed Chana output in 2009-10 at 7.35 million tonnes against 7.05 million tonnes in 2008-09.

An increase in the acreage of the Kharif Pulses, the downward price pressure is seen in pulses, especially Chana.

In NCDEX-accredited warehouses, stocks of Chana stood at 35456 tonnes as of October 6th, 2010.

In Mumbai, the prices of tur, since the middle of the month of April, have increased to about Rs.75 a kg from Rs.21 during this year. According to data given by consumer affairs ministry, the price for tur in Kolkata has increased by Rs.30 in three months.

Other pulses are also witnessing a steep price hike. In Delhi, gram prices have soared by Rs.6 in three months. In Shimla, the cost of gram has increased by Rs.7 to around Rs.38 per kg from the middle of April.

Prices of all the pulses are trading in the average range. The prices of such pulses were too higher last year, but now days these prices are falling continuously on account of good production and subsidies provided by the Government.

Chana is the leading commodity in the pulses. Chana is traded in the future market also, and its prices in the future market is around 2300 per quintal, while other commodities are not traded in the future market.

So, we can expect a downward correction in the prices of the pulses after Diwali festival. All the factors responsible for this are mentioned above higher output expected in this season. Till then prices of pulses can be steady or may improve little by around 5-10%.

Source : commodityonline.com